Oil Price - Jan 16

[dan_s]

I expect oil to stay in a tight range during January, between $50 & $55 for WTI.

Saudi Arabian Energy Minister Khalid al-Falih said on Monday that the kingdom will adhere strictly to its commitment to cut output under the global agreement, expressing confidence that OPEC's plan to prop up prices would work.

OPEC plans to release its monthly oil report on Wednesday, while the International Energy Agency’s monthly report is due the day after, as traders look for further evidence that oil producers are adhering to planned output cuts.

ABU DHABI (Reuters) - OPEC and non-OPEC producers are unlikely to extend their agreement to cut oil output beyond six months, because of the level of compliance with the deal and the rebalancing of the market, Saudi Arabian Energy Minister Khalid al-Falih said on Monday.

However Falih, speaking to reporters on the sidelines of an industry event in Abu Dhabi, also said producers would reassess the situation and extend the agreement if necessary.

"We don't think it's necessary given the level of compliance...and given the expectations of demand," he said.

"My expectations (are)...that the rebalancing that started slowly in 2016 will have its full impact by the first half."

Falih said: "Based on my judgment today it's unlikely that we will need to continue (the agreement) - demand will pick up in the summer and we want to make sure that the market is supplied well. We don't want to create a shortage or squeeze.

"The extension will only happen if there is a need."
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As I told you in my last podcast, demand for oil will spike about a million barrels per day from Q2 to Q3 as it does year-after-year. If OPEC+Russia cut over a million barrels per day (compared to their agreements of 1.8 million barrels per day) the global oil market will be "short" oil within six months. U.S. oil production will only grow 300,000 to 500,000 BOPD this year and all other Non-OPEC production will be flat to down.